Certifications Mock Tests Study Material Menu Certifications Mock Tests Study Material NISM Series X-B: Investment Adviser (Level 2) Mock Test (Set 4) /50 NISM Series X-B: Investment Adviser (Level 2) Mock Test (Set 4) 1 / 50 1. The account is a voluntary investment account of the subscriber under NPS. a) Tier I b) Tier II c) Both Tier I and II d) Either Tier I or Tier II as specified by the subscriber while filling the application form Explanation:he account that is a voluntary investment account under the National Pension System (NPS) is Tier II. Tier II accounts provide subscribers with flexibility for additional voluntary contributions beyond the mandatory Tier I contributions, allowing for a more versatile investment approach. 2 / 50 2. If the two persons are related by blood or adoption, wholly through females then what is said for one person to another: a) Cognate b) Agnate c) Urine Blood Relations d) None of the above Explanation:If two persons are related wholly through females, they are said to be cognate. This term specifies a blood relationship traced through the female line, distinguishing it from agnate relationships traced through males. 3 / 50 3. Which of the following statements about reverse mortgage is FALSE? a) The rate of interest and the nature of interest (fixed or floating) will be decided by the lender. b) Any transfer of a capital asset in a transaction of reverse mortgage shall be regarded as a transfer. c) A borrower, under a reverse mortgage scheme, will be liable to income tax only at the point of alienation of the mortgaged property by the mortgagee for the purposes of recovering the loan. d) The Reverse Mortgage loan can be prepaid at any time during the currency of the loan. Explanation:The Reverse Mortgage loan can be prepaid at any time during the currency of the loan. 4 / 50 4. __________ is a part of salary that is received by an employee from his/her employer in gratitude for the services offered by the employee in the company. a) Gratuity b) Annuity c) PF d) PPF Explanation:Gratuity is a part of salary received by an employee from the employer in gratitude for services offered. It is a statutory benefit designed to acknowledge an employee’s long-term commitment and contribution to the company. 5 / 50 5. Securities Transaction tax is paid as per the tax slab (marginal rate) of the investor. a) True b) Flase Explanation:Securities Transaction Tax (STT) is not paid as per the tax slab of the investor. Instead, it is a fixed amount levied on the value of securities transactions. This unique tax structure distinguishes STT from other taxes based on income. 6 / 50 6. An Investor invests in Equity and Gold ETF in the ratio 70:30. However after some time he feels that Equity markets will underperform in the short term while Gold will give good returns over the same time frame. He switches the allocation to 70:30 in favor of Gold ETF. This is an example of _________. a) Strategic Asset Allocation b) Tactical Asset Allocation c) Fixed Asset Allocation d) Flexible Asset Allocation Explanation:Switching the allocation of an investment portfolio from 70:30 in favor of equity to 70:30 in favor of gold ETF is an example of Tactical Asset Allocation. This strategic adjustment responds to short-term market expectations, optimizing the portfolio based on anticipated market performance. 7 / 50 7. Gratuity in the hands of government employee is ____________. a) Fully taxable b) Fully exempted from tax c) Taxable on maturity Explanation:Gratuity in the hands of a government employee is fully exempted from tax. This exemption recognizes the significance of gratuity as a retirement benefit for government employees. 8 / 50 8. Chintu is earning Rs.15 lacs p.a. and expects his income to increase by 2% every year. He also expects a growth of 8% on his investment. He has 15 years of working life left as he would retire at the age of 55. Calculate the insurance he needs as per Human Life Value as on today? a) Rs.1.55 crores b) Rs.2.44crores c) Rs.1 crore d) Rs.1.78crores Explanation:Calculating insurance needs based on Human Life Value for Chedilal, considering an annual income increase of 2% and an expected investment growth of 8%, results in an insurance requirement of Rs. 1.55 crores. This calculation ensures adequate coverage aligning with Chedilal’s evolving financial circumstances. 9 / 50 9. Maximum tenure of a RML is______________________? a) 10 Years b) 15 Years c) 20 Years d) 25 Years Explanation:The maximum tenure of a Reverse Mortgage Loan (RML) is 20 years. This time frame provides seniors with a steady stream of income while allowing them to remain in their homes without repayment obligations during the loan tenure. 10 / 50 10. An investor under the National Pension System can choose which of the following asset classes? a) Corporate debt b) Government Securities c) Equities d) Alternative Investment Funds e) Any of the above Explanation:Under the National Pension System (NPS), an investor can choose any of the following asset classes: Corporate debt, Government Securities, Equities, and Alternative Investment Funds. This flexibility allows investors to tailor their portfolios based on risk preferences and investment objectives. 11 / 50 11. As per the provisions of the Payment of Gratuity Act, what is the minimum qualifying service necessary for being entitled to receive gratuity ? a) There is no minimum service requirement and every employee is entitled to gratuity b) One year c) Three years d) Five years Explanation:As per the Payment of Gratuity Act, the minimum qualifying service necessary for being entitled to receive gratuity is five years. This condition ensures that employees who have demonstrated a significant and enduring commitment to their employers qualify for gratuity benefits. 12 / 50 12. Suneel had taken a loan of Rs. 6,00,000 in the year 2012-13 from a Bank to fund education expenses of B.Tech studies of his son Ashish in India. During the year 2018-19, he repaid total principal component of Rs. 35,000 and interest component of Rs. 55,000. What deduction would be available under Section 80 E of Income tax Act to Suneel for AY 2019-20? a) Rs. 55,000 b) Rs. 35,000 c) Rs. 90,000 d) Deduction is available only on Principal part on Loan taken for the purpose of self education Explanation:Under Section 80E of the Income Tax Act, Suneel is eligible for a deduction of Rs. 55,000 for AY 2019-20. This deduction is applicable for the interest component paid on the education loan, supporting individuals funding their own or their dependent’s higher education. 13 / 50 13. Which of the following will not come under the head Income from Salary? a) Pension b) Profits earned from the business c) Gratuity d) Fees, commissions, profits in lieu of salary Explanation:Income from profits earned from the business does not come under the head “Income from Salary.” This classification distinguishes business profits, which are reported separately, from income sources falling under the specific category of salary. 14 / 50 14. _______ means a rate inclusive of surcharge and health and education cases which is leviable on the income of an assessee. a) Maximum alpha tax rate b) Maximum marginal rate c) Maximum cap rate d) Effective tax rate Explanation:The term “Effective tax rate” refers to a rate inclusive of surcharge and health and education cess, leviable on the income of an assessee. This comprehensive rate reflects the actual tax burden on the taxpayer, accounting for additional charges beyond the basic tax rate. 15 / 50 15. Which of the following is not a defined contribution scheme? a) Gratuity b) National Pension scheme c) Providend Fund d) All of the above Explanation:Gratuity is not a defined contribution scheme. Unlike schemes such as the National Pension Scheme or Provident Fund, gratuity involves an employer’s obligation to pay a lump sum based on the employee’s service duration and last drawn salary. 16 / 50 16. Manohar left India after November 2019 for a business trip. He was resident in India for 3 out of 10 previous years. For the immediately preceding 7 and 4 previous years, he stayed in India for 690 days and 345 days respectively. Determine his residential status for AY 2020-21. a) Resident but Not Ordinarily Resident b) Non-resident Indian c) Resident and Ordinarily Resident d) Deemed Resident Explanation:Manohar’s residential status for AY 2020-21 is Resident but Not Ordinarily Resident (RNOR). Meeting the conditions of staying in India for less than 729 days in the preceding seven years and being a resident in India for 3 out of the 10 previous years classifies him as RNOR. 17 / 50 17. Which of the following are features of investments suitable in the distribution stage? a) Protection from inflation b) Stable returns c) Income orientation d) All the options given here Explanation:Features of investments suitable in the distribution stage include protection from inflation, stable returns, and income orientation. These characteristics address the needs of investors entering the distribution phase, where they rely on their investments for regular income while seeking protection against inflation. 18 / 50 18. Which of the following potential losses is not an example of a pure risk ? a) Loss of a home by fire b) Theft of a car c) Loss of 1,00,000 in the stock market d) Theft of your wallet containing Rs 5,000 Explanation:A loss of Rs 1,00,000 in the stock market is not an example of a pure risk. Unlike losses due to fire, theft, or accidents, stock market losses are speculative risks. Speculative risks involve the potential for both gain and loss, making them inherently different from pure risks, which only have adverse outcomes. 19 / 50 19. In computing indexed cost of acquisition _____ is not required. a) Cost of acquisition b) Cost inflation index of the year of improvement of capital asset c) Cost inflation index of the year of acquisition of capital asset d) Cost inflation index of the year of transfer of capital asset Explanation:In computing the indexed cost of acquisition, the cost inflation index of the year of improvement of the capital asset is not required. This simplification streamlines the calculation process, focusing on relevant indices for determining the adjusted cost of acquisition. 20 / 50 20. _______is that portion of the claim which is paid by the Insured person after which the claim becomes admissible. a) Co-Pay b) Deductible c) Contribution d) Subrogation Explanation:The portion of a claim paid by the insured before it becomes admissible is known as a deductible. This financial threshold ensures that the insured shares a portion of the financial responsibility, aligning with the principle of risk-sharing in insurance contracts. 21 / 50 21. An employee, on retirement from a company covered under the Payment of Gratuity Act, 1972, has served for 23 years and 4 months with his last monthly basic salary being Rs 37,500 and dearness allowance being 40% of basic salary. What amount of gratuity is eligible to the employee ? a) Rs 4,97,596 b) Rs 5,19,231 c) Rs 7,26,923 d) Rs 6,96,635 Explanation:Calculating gratuity for an employee with 23 years and 4 months of service, a last basic salary of Rs 37,500, and a 40% dearness allowance results in an eligible amount of Rs 6,96,635. This calculation, based on the Payment of Gratuity Act, acknowledges the employee’s long service and salary components. 22 / 50 22. The person who is named in a will to receive a portion of the deceased person’s estate is known as a _________. a) Executor b) Nominee c) Testator d) Legatee Explanation:A person named in a will to receive a portion of the deceased person’s estate is known as a legatee. Legatees inherit specific assets or sums as designated in the will, distinguishing them from other roles such as executors or nominees. 23 / 50 23. The term of insurance in non-life insurance is typically __________. a) One year b) Decided by the insured c) Decided based on sum insured d) Flexible Explanation:The term of insurance in non-life insurance is typically one year. This annual renewal cycle allows insurers to reassess risks and adjust premiums accordingly. The short-term nature aligns with the dynamic nature of non-life risks and provides flexibility for both insurers and policyholders. 24 / 50 24. The premium payable on a ULIP is higher for the same sum assured as a term policy because ___________. a) The period of cover is shorter b) A portion of the premium is used for investment c) A portion of the premium is used for investment d) The risk is higher Explanation:The premium on a ULIP is higher due to a portion being used for investment, distinguishing it from a term policy. This investment component allows policyholders to participate in market returns, adding a wealth-building element to their coverage. This contrasts with term policies, focused solely on providing a death benefit for a specified term. 25 / 50 25. If the post tax rate of return on an investment is 8% and the inflation rate is 5% the real rate of return is_____________. a) 3.5% b) 3.0% c) 2.86% d) 4.0% Explanation:Real rate of return = (1+Nominal rate / 1+Inflation rate) – 1Real rate of return = (1.08/1.05) -1 =2.86% 26 / 50 26. Where do you not find insurable interest in the following options? a) Brother-Sister b) Husband-Wife c) Surety-Co Surety d) Employee-Employer Explanation:Insurable interest is not found in the option Brother-Sister. 27 / 50 27. Which entity has been established under the National Pension System (NPS) architecture to conduct due diligence of received applications and maintain and report transactions ? a) Points of Presence (POP) b) Retirement Advisors (RA) c) Central Recordkeeping Agency (CRA) d) Custodian and Trustee Bank Explanation:Points of Presence (POP) conduct due diligence and maintain transactions under the National Pension System (NPS). 28 / 50 28. Which of the following can deal with multiple insurance companies? a) Insurance broker b) Insurance broker c) Corporate insurance agent d) Bank assurance channel Explanation:An insurance broker can deal with multiple insurance companies. 29 / 50 29. The asset reconstruction company means a company registered with RBI under ______ of the SARFAESI act. a) Section 1 b) Section 2 c) Section 3 d) Section 4 Explanation:An asset reconstruction company under the SARFAESI Act is registered under Section 3. 30 / 50 30. ________ was inserted under Income-tax act to curb the practice of bonus stripping. a) Section 16(6) b) Section 36(7) c) Section 21(4) d) Section 94(8) Explanation:Section 94(8) was inserted under the Income-tax Act to curb the practice of bonus stripping. 31 / 50 31. Defined benefit plan is one in which ___________. a) A specified monthly pension payment is available on retirement b) Retirement benefit is dependent on the amount accumulated c) A fixed amount is to be invested in a market linked portfolio every month d) Investment returns are fixed Explanation:A defined benefit plan provides a specified monthly pension payment on retirement. 32 / 50 32. A composite Agent can promote the products of ___________. a) More than one life insurer, one general insurer, one health insurer and one each of the mono-line insurers b) Not more than one life insurer, one general insurer, one health insurer and one each of the mono-line insurers c) One who is appointed by two life insurance companies and two general Insurance Companies d) One who is appointed by 2 General Insurance companies Explanation:One who is appointed by 2 General Insurance companies 33 / 50 33. The carried forward a loss from non-speculative business can be set off against ________. a) Income from other sources b) Business income c) Capital gains d) Only 1 and 3 Explanation:Carried forward losses from non-speculative business can be set off against business income. 34 / 50 34. The zero coupon bonds are treated as long-term capital asset if they are held for more than ___________. a) 36 months b) 12 months c) 18 months d) 24 months Explanation:Zero coupon bonds are treated as long-term capital assets if held for more than 12 months. 35 / 50 35. For what maximum period can a Reverse Mortgage Loan be taken ? a) 30 years b) 20 years c) 10 years d) Life of the borrower Explanation:A reverse mortgage loan can be taken for a maximum period of 20 years. 36 / 50 36. Which provision of the Insurance Act 1938 specifies about nomination by policy holder ? a) Section 38 b) Section 39 c) Section 40 d) Section 41 Explanation:The Insurance Act 1938 was amended in February 2015 to provide that where the Nominee of a Life Insurance Policy is “the parent, or spouse, or his children, or his spouse and children, or any of them, the nominee or nominees shall be beneficially entitled to the amount payable by the Insurer to him or them” (Section 39(7) of the Life Insurance Act 1938). 37 / 50 37. Risk appetite of investors is assessed through _____________. a) Risk Appetizers b) Asset Allocators c) Risk Profilers d) Risk Profilers Explanation:Risk appetite of investors is assessed through risk profilers. 38 / 50 38. The maximum deduction allowed under the Income Tax Act for home loan repayments is________. a) Up to Rs. 1,50,000 of interest paid only b) Up to 2,00,000 of interest paid and up to Rs. 1,50,000 of principal paid c) Up to Rs. 1,00,000 of principal paid only d) 30% of net annual value of the property Explanation:The maximum deduction for home loan repayments is up to Rs. 1,50,000 of interest and up to Rs. 1,50,000 of principal paid. 39 / 50 39. __________is the proportion of the claim amount which will be met by the Insured person. a) Co-Pay b) Deductible c) Contribution d) Subrogation Explanation:Co-pay represents the insured person’s proportion of the claim amount. 40 / 50 40. Which is true in case of liquidation of the company ? a) All the liabilities are paid off first b) Remaining assets are distributed among the equity shareholders c) Such distribution of assets not treated as transfer for capital gains d) All of the above Explanation:In company liquidation, remaining assets are distributed among equity shareholders, and it’s not treated as a transfer for capital gains. 41 / 50 41. What is Human Life Value? a) Present value of persons estimated expenses b) Present value of persons Future savings c) Present value of persons future earnings d) Present value of persons future expenses Explanation:Human Life Value is the present value of a person’s future earnings. 42 / 50 42. Loss from Business or Profession cannot be set-off from ____________. a) Short Term capital gain b) Income from other sources c) Profits and gains from business or profession d) Income from salary Explanation:Losses from business or profession can be set off against income from the same head or other heads of income except income chargeable to tax under the head “Salaries”. Losses can be carried forward for a period of 8 years. 43 / 50 43. The period of holding for securities held in demat form is determined as per _______. a) Date of allotment b) FIFO method c) LIFO d) Date of transfer Explanation:The period of holding for demat securities is determined as per the FIFO method. 44 / 50 44. If Interest rates falls, Reinvestment Risk ____________? a) Increase b) Decreases c) Stays constant d) First increases and then decreases Explanation:If interest rates fall, reinvestment risk increases. 45 / 50 45. Surinder had taken a 25-year life insurance policy with a sum assured of Rs. 1,000,000 with the premium being paid in a half-yearly mode. After paying the premium for five years, Surinder is unable to continue paying the premium payment. What happens to the policy? a) Insurance Company will cancel the policy automatically and return premium paid b) Insurance Company will cancel the policy automatically and return premium paid with interest c) Insurance Company will readjust the Sum Assured to the Paid Up value d) surance Company will force Surinder to Surrender the policy Explanation:If Surinder stops paying premiums after five years, the insurance company adjusts the sum assured to the paid-up value. 46 / 50 46. A client explains that she only wants an insurance policy that will cover her family against financial risk over the next five years, while she still has dependent children and a large mortgage. It is unlikely her income will increase over this period. What type of insurance is she looking for? a) An unit linked insurance plan b) Money back policy c) Term insurance with a level premium d) Term insurance with a level premium Explanation:A client seeking coverage for family financial risk over five years without income increase needs term insurance with a level premium. 47 / 50 47. The amount of human life value is calculated by properly discounting the ____________. a) current earnings of the insured b) fraction of the income of the insured that is used for the dependents c) saving potential of the insured d) potential of consumption expenditure of the insured Explanation:Human life value is calculated by discounting the fraction of the insured’s income used for dependents. 48 / 50 48. Any losses arising out of the transfer of short term capital assets can be set off against: a) Only short term capital gains b) Only against long term capital gains c) Both short and long term capital gains d) None of the above Explanation:Losses from the transfer of short-term capital assets can be set off against both short and long-term capital gains. 49 / 50 49. In case the accumulated corpus at the time of exit (Exit and Withdrawal on retirement) is equal or less than _________, the NPS subscriber will have the option to withdraw the entire corpus in lumpsum. a) Rs.5 lakhs b) Rs.6 lakhs c) Rs.7 lakhs d) Rs.8 lakhs Explanation:NPS subscribers can withdraw the entire corpus in lumpsum if it’s equal or less than Rs.5 lakhs. 50 / 50 50. Maximum tenure of a RML is______________________? a) 10 Years b) 15 Years c) 20 Years d) 25 Years Explanation:The maximum tenure of a Reverse Mortgage Loan (RML) is 20 years. This time frame provides seniors with a steady stream of income while allowing them to remain in their homes without repayment obligations during the loan tenure. Your score is 0% Restart quiz Exit
